Vanderbilt Securities Broker Steals From Clients

Your personal b.s. detector isn’t ‘broken;’ it never worked reliably in the first place.

It happens every day. Several times a day. A stockbroker convinces one of his customers that he’s identified a profitable investment. He describes it in glowing terms and gets the customer to agree to the purchase. The broker then sends the customer’s money to a company that he controls and spends the money on his own personal obligations. The SEC has caught another such character in Connecticut. According to the SEC’s release: (more…)

$25 for a Cheeseburger?!

They graduated from the Ivy League. They’ve got PhDs. They’ve earned every meaningful professional designation imaginable. How could they miss these things?

I remember listening to the Pretenders in the 70’s and 80’s, and I remember reading a Rolling Stone interview with the band’s lead singer, Chrissie Hynde. Talking about the hassle’s of the road, she recounted how, once people learned who they were, the price for everything would skyrocket.  The owner of one roadside diner decided that his $2.95 cheeseburger cost $25 the night the band stopped in for dinner. Last week, the SEC filed an enforcement action with parallels to that story. According to the SEC’s press release: (more…)

Accepting the Consequences

A woeful lack of due diligence by financial advisers will contribute to the loss of thousands of retirement nest eggs this year.

In June 2010, the SEC took emergency action to shut down a $105 million Ponzi scheme operated by Daniel Spitzer out of the Virgin Islands. Last week, the Commission filed an enforcement action against a Bucks County, Pennsylvania, financial adviser for alleged active participation with that scheme. According to the SEC’s press release: (more…)

Merrill Lynch Consents to Sanction for Cheating Muni Bond Investors

That such a finding is not newsworthy should speak volumes to you about the danger of the investing landscape.

There is so much misconduct in the securities industry that reporters have given up on covering all of it. And for a very practical reason; it would be like writing a story every time a driver was stopped for exceeding the speed limit on the local interstate. Sure, it’s a violation of the law, but it happens so often that they could write about nothing else. And so, a recent disciplinary action against Merrill Lynch by the Financial Industry Regulatory Authority (FINRA) didn’t warrant a mention. (more…)

Advice from Someone Who Knows

Taking the proper mental approach to an investigation will not come to you naturally.

Kent Burleson of Maryville, Tennessee, was a lineman and a splicer for AT&T. For thirty years he built up a nest egg sufficient to provide him with a comfortable retirement. When he retired, he entrusted that nest egg to Benchmark Capital, Inc. Reporter J.J. Kindred of The Daily Times has written a compelling account of what happened next. The entire story is well worth your time. For our purposes, we’ve copied excerpts below: (more…)

Call It a Loan

A thoroughly legal attempt to earn a profit for investors has nothing to fear from regulators.

Massachusetts Secretary of State William Galvin has filed Ponzi charges against a Belmont, Massachusetts man, alleging that his sale of promissory notes violated the anti-fraud provisions of the Massachusetts Securities Act. The defendant, John W. Cranney, is defending (he is innocent until proven guilty) by saying that the promissory notes were ordinary loans and not securities. According to boston.com: (more…)

Put Your Money On “Still Alive”

Word is that Price boarded a ferry from Key West and wasn’t on it when it docked.

The tradition of faking suicide to avoid justice after an investment scheme is long and rich. From Sam Israel’s phantom leap from the Bear Mountain Bridge to Marcus Schrenker’s attempt to crash his plane into the Gulf of Mexico after parachuting out over Alabama, investment scamsters have a way of carrying the ingenuity that made them successful scamsters into their attempts to get away with it. The latest potential entrant into that club is Aubrey Lee Price. The SEC froze his assets yesterday. Word is that Price boarded a ferry from Key West and wasn’t on it when it docked. All that was left of him was a purported suicide note. According to the SEC’s press release: (more…)

Avoiding the Heat . . . In Arizona

Unless you learn about those biases, you are captive to them.

Most of our posts about investment criminals who flee from police involve flight overseas. Europe, Africa, South and Central America. Indonesia and the Phillipines are becoming popular hideouts. But a recent story from Illinois demonstrates how effectively a determined con artist can hide without leaving the U.S. According to Daily Herald: (more…)

Clicking Away Your Nest Egg

The ads are legit, and those who advertise must be paying something for the privilege, right?

Although my mother-in-law steadfastly refuses to get a computer or even accept one as a gift, the vast majority of the world has entered the Internet age. We are comfortable on-line and understand that advertising is part of the experience. It was the same with magazines and the television shows, so we don’t buck too much. We see ads from companies that we recognize and even from political campaigns. The ads are legit, and those who advertise must be paying something for the privilege, right? Beyond that, we don’t quite understand it. When someone tells us that we can earn money every time someone clicks on a certain link, we might be skeptical, but we don’t quite have enough knowledge to know for sure whether such a thing is possible. Scamsters continue to take advantage of that gap in our understanding. A case from Michigan is Exhibit A for the day. According to hollandsentinel.com: (more…)

SEC Alleges Cross-Border Fraud By Texas RIA

All RIAs are not created equal.

Last week we posted on a case in which U.S. fraudsters targeted elderly investors in the U.K.  Today brings a story about a U.S. registered investment adviser (RIA) who allegedly defrauded a client in Mexico. According to the SEC’s press release: (more…)

Atlanta Prime Bank Fraud

The best you can do to protect yourself against a prime bank fraud it to know more about how they operate.

Like stand-up comedians, prime bank scamsters change their material to appeal to those who may have seen the act before. — The Vigilant Investor, p. 61

It’s the scam that will not die. Someone could get a PhD in social psychology by studying just why this particular brand of investment fraud is so resilient. It’s called the prime bank scam, and it has been around since the 1950s, although its modern resurgence dates to the early 1990s. The SEC believes that it has found yet another prime bank scam right in Investor’s Watchdog’s backyard. According to the SEC’s press release: (more…)

Promissory Notes Used to Fleece the Faithful

The preachers who urge you to expect it are, at best, misinformed about what God promises or, at worst, con men of the most despicable sort.

The sermon is familiar. If you will but entrust yourself to God Almighty, he will bring you prosperity and material wealth here on earth. By that sermon, preachers have for hundreds of years convinced congregants to part with the rent money, the milk money, and whatever is hiding in the couch cushions, fully expectant that they will soon be millionaires whether by lottery numbers or bequest from a long lost relative. Such a windfall is never forthcoming. The preachers who urge you to expect it are, at best, misinformed about what God promises or, at worst, con men of the most despicable sort. A recent case out of Georgia is familiar. According to AJC.com: (more…)

SEC Tags Investment Seminar Salespeople

Don’t believe the rumor of a shortcut

“I can teach you how to be a millionaire by following my five simple rules of stock market investing.” Pitchmen galore make a version of that promise hundreds of times every day, in television and radio ads, in print advertising, and on signs placed on street corners. Ask yourself this question: if they are good enough at whatever it is they promise to teach you how to do, and that something makes money, why don’t they just get on with it and make their millions instead of taking a couple hundred dollars from you? There is no satisfactory answer to that question. Yet, such investment seminars continue to make millions, a few hundred dollars at a time. The SEC recently concluded enforcement actions against two such characters. According to the SEC’s press release: (more…)

Louisiana Authorities Ring Up Allegedly Crooked Baseball Coach

Selling investments is what they know, and they keep right on doing it, without a license.

I coached baseball for ten years. It was the best decade of my life up to that point. The memory of teaching life lessons through the best game in the world is among my most cherished. Baseball helped turn my sons and their teammates into productive young men, and it introduced my family to the people we still consider our closest friends years after our kids moved on to college. That’s why the story that I write about today caught my eye. According to NOLA.com: (more…)

Spending Time with Mom

When mothers and daughters are getting together across the kitchen table to engineer a successful securities fraud, there are no barriers to entry.

As a parent about to send his youngest off to college, I have a soft spot in my heart for any adult child willing to spend time with his or her Mom or Dad. But, as today’s post makes clear, such relations are not always good for the rest of society. According to the SEC’s press release: (more…)

The Teenaged Twins and the Stockpicking Robot

How hard do you think a pump and dump scamster has to look to find someone willing to accept an envelope stuffed with cash?

A couple of weeks ago our posts covered scams perpetrated by con artists older than 70. We made the point then that, while old age brings wisdom, it doesn’t alter larcenous inclinations. Today’s post shows us that that inclination can reveal itself quite early and that investment fraud welcomes every age group. According to the SEC’s press release: (more…)

Another Aussie Ponzi?

Cautionary thoughts don’t stand a chance in the presence of all of that positive feedback.

Recemtly, we learned of yet another alleged Ponzi from Australia. According to PerthNow: (more…)

SEC Gets a Judgment Against One of the Top Wealth Advisers in America

Vigilance in the price of enjoying the retirement for which you have worked and saved.

To set up a recent development in an SEC enforcement case, we begin with an excerpt from The Vigilant Investor: (more…)

A Fib on the Resume Speaks Volumes to a Vigilant Investor

They are afraid that you won’t be impressed with the truth.

Yahoo CEO Scott Thompson has put resume inflation in the news again. Whether he will survive the scandal is anyone’s guess. But I’m grateful that he has given me a chance to address a subject that all vigilant investors must understand. (more…)

Ponzi in Potato Country and a Lesson from Mother Theresa

We cannot and should not look to them to prevent investment fraud before it starts.

I keep track of the states in which the investment scams I write about are based. (After four years of writing every weekday, Vermont finally joined the list last week). Today’s post takes us to one of the states we rarely get to write about — Idaho. According to KPVI News 6: (more…)

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